Investor Presentation November 2019 DISCIPLINED INVESTING CAPITAL - - PowerPoint PPT Presentation
Firm Capital Mortgage Investment Corporation Firm Capital Mortgage Investment Corporation is a non-bank lender providing residential and commercial real estate financing. Investor Presentation November 2019 DISCIPLINED INVESTING CAPITAL
DISCIPLINED INVESTING ● CAPITAL PRESERVATION
Firm Capital Mortgage Investment Corporation
Firm Capital Mortgage Investment Corporation is a non-bank lender providing residential and commercial real estate financing.
November 2019
DISCIPLINED INVESTING • CAPITAL PRESERVATION
➢ All loans syndicated to various parties ➢ “Pari-passu” basis ➢ Right of first refusal on all loans
DISCIPLINED INVESTING • CAPITAL PRESERVATION
Note: (*) Actively co-invests with FC MIC on mortgage transactions
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investments, not cash balances
performing investments
mezzanine and equity investments after first earning a 10% preferred return
conventional mortgages
most investments
DISCIPLINED INVESTING • CAPITAL PRESERVATION
Conventional First Mortgages 70.5%
Conventional Non-First Mortgages 8.6% Related Investments 19.0% Other 1.9%
Ontario 91.1%
Quebec 2.1% Western Canada 3.9% Other 2.9%
*(excluding Related Investments)
$313 $6 $167 $15
$- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Millions
$501MM
Bank Indebtedness Convertible Debentures Other Liabilities Equity
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Series D 4.75% Due Mar/2020 Series E 5.30% Due May/2022 Series F 5.50% Due Dec/2022 Series G 5.20% Due Dec/2023 Series H 5.30% Due Aug/2024 Series I 5.40% Due Jun/2025 Series J 5.50% Due Jan/2026 $- $17.0 $34.0 $51.0 $68.0 $85.0 $102.0 $119.0 $136.0 $153.0 $170.0 1
Millions
$25.0 $25.0 $26.5 $22.5 $23.0 $25.0 $20.0
(1) (1) (1) At par value
DISCIPLINED INVESTING • CAPITAL PRESERVATION Note: (1) Capital is based on total paid up Shareholder’s Equity and Convertible Debentures
restricted to 5% and 10% of capital, depending on LTV (1)
restricted to 2.5% of capital (1)
first mortgage investments
diversify risk
audits, structural audits
15 days
management
independent directors
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(1) Gross of impairment provision
Quarter Ended Sept 30, 2019 Quarter Ended Jun 30, 2019 Quarter Ended Mar 31, 2019 Quarter Ended Dec 31, 2018 Quarter Ended Sep 30, 2018 Mortgage Portfolio (millions)(1) $467 $539 $550 $521 $535 Basic Profit Per Share $0.273 $0.251 $0.246 $0.233 $0.265 Dividends Per Share $0.234 $0.234 $0.234 $0.284 $0.234 Return on Equity 9.82% 9.06% 8.97% $9.01% 9.69% Loan Losses None None None None None
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(1) Fourth quarter dividends include one time payout of accumulated excess earnings throughout the year (2) Impairment allowance of $5.48 million does not include allowance for credit losses of $3.2 million
($ in millions) Quarter Ended Sep 30, 2019 Quarter Ended Jun 30, 2019 Quarter Ended Mar 31, 2019 Quarter Ended Dec 31, 2018 Quarter Ended Sep 30, 2018 Interest and Fees Earned $12.23 $12.21 $11.86 $11.53 $12.39 Interest and Operating Expenses $4.54 $5.16 $5.27 $5.43 $5.46 Profit $7.69 $7.05 $6.60 $6.10 $6.93 Dividends to Shareholders $6.59 $6.57 $6.26 $7.43(1) $6.11 Impairment allowance $5.48(2) $5.48(2) $4.95 $4.95 $5.0
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
FC 9.82% Gov’t of Canada 1-yr. T-bill 1.74%
DISCIPLINED INVESTING • CAPITAL PRESERVATION 0.133 0.108 0.148 0.128 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 Jan. May. Sep. Jan. May. Sep. Jan. May. Sep. Jan. May. Sep. Jan. May. Sep.
2015 TOTAL : $0.991 2016 TOTAL : $0.966 2018 TOTAL : $0.986 2017 TOTAL : $1.006
2019 YTD $0.702
DISCIPLINED INVESTING • CAPITAL PRESERVATION
$210 $235 $226 $170 $205 $274 $297 $340 $343 $403 $449 $562 $521 $467
$96 $147 $146 $150 $133 $167 $180 $213 $307 $285 $254 $262 $375 $221 $140 $173 $136 $94 $169 $236 $204 $256 $311 $345 $291 $375 $287 $167 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD Mortgage Portfolio Repayments New Investments
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Transaction Volume (in $MM): 2012 – 2019
$515 $665 $755 $793 $735 $1,000 $731 $440 $- $200 $400 $600 $800 $1,000 2012 2013 2014 2015 2016 2017 2018 2019
Millions
DISCIPLINED INVESTING • CAPITAL PRESERVATION
Millions
Equity Offering $13.45/share
Total: $360MM
Series B Convert 5.40% Series C Convert 5.25% Series D Convert 4.75% Equity Offering $12.10/share Series E Convert 5.30% Series F Convert 5.50% Equity Offering $12.90/share Series G Convert 5.20% Equity Offering $14.10/share Series H Convert 5.30% Series I Convert 5.40% $31.4MM Series A Convert 5.75% $25.7MM $20.5MM $20.0MM $23.6MM $25.0MM $25.0MM $23.0MM $25.3MM $22.5MM $23.0MM $26.5MM $20.7MM $25.0MM Series J Convert 5.50%
Convertibles Equity Convertibles fully redeemed at par
$23.1MM Equity Offering $13.20/share
DISCIPLINED INVESTING • CAPITAL PRESERVATION $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 $14.50 200 400 600 800 1000 1200 2013 2014 2015 2016 2017 2018 2019 Thousands Volume Traded Trading Price
DISCIPLINED INVESTING • CAPITAL PRESERVATION
$399 $100 $795 S&P/TSX Composite Index Firm Capital Mortgage Investment Corp.
Since Oct. 15th, 1999 till Sept. 30th, 2019
DISCIPLINED INVESTING • CAPITAL PRESERVATION
revolve our mortgage investment portfolio with new investments based on new valuations. We feel this risk mitigation policy is important in addressing the ongoing changes in certain property
Toronto Area or GTA (otherwise known as the "905" region) have declined as a result of slower home sales. From within the GTA (otherwise known as the "416" region), we have seen infill building lots, and housing decline in value in various areas.
properties are trading at extremely low unlevered capitalization rates (otherwise known as "cap" rates), in some cases below 3%, when publicly traded REIT’s are yielding much higher returns. This is due to the fact that the capital markets are always ahead of the hard asset market by approximately 18 months. Rental rates on income-producing properties are at an all-time high, so if rents are not going up, then low cap rates may not be justified.
valuations and not historical numbers and values. This strategy will take 24 months to accomplish, the result of which will be a strong balance sheet with growth based on fresh underlying property valuations and no concerns of exits on defaults. This redeployment of capital will take time. Over the next 24 months, our strategy will cause our investment portfolio size and interest revenue line to fluctuate; however, the long-term strategy will meet our constantly stated objective of protecting shareholders' equity.
DISCIPLINED INVESTING • CAPITAL PRESERVATION
This presentation contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this presentation, and other statements concerning Firm Capital Mortgage Investment Corporation’s (“FCMIC” or the “Corporation”) objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. All forward-looking statements in this presentation are qualified by these cautionary statements. These statements are not guarantees of future events or performance and, by their nature, are based on FCMIC’s estimates and assumptions, which are subject to risks and uncertainties, which could cause actual events or results to differ materially from the forward-looking statements contained in this presentation. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with current economic conditions, occupancy levels, access to debt and equity capital, interest rates, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions or dispositions, construction, environmental matters, legal matters, reliance on key personnel, income taxes, the conditions to the transactions not being satisfied resulting in the failure to complete some or all of the proposed transactions described herein, the trading price of the securities of FCMIC, lack of availability of acquisition or disposition opportunities for the Corporation and exposure to economic, real estate and capital market conditions in North America. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: that the general economy remains stable, interest rates are relatively stable, acquisition/disposition capitalization rates are stable, competition for acquisition or disposition
considered reasonable by the Corporation at the time of preparation, may prove to be incorrect. Although the forward-looking information contained in this presentation is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this presentation may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this presentation. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time